This week we received conflicting reports about the so-called “condo bubble” in Toronto. One report from RBC seems confident that we are not in a bubble. The pace of construction is keeping pace with the creation of new homes in Toronto. Since land is becoming scarce in Toronto, builders are being forced to build up, and not out anymore. That being said, they do foresee a cooling, with a 2-7% drop in condo prices brought on by recent government changes.
The other report released this week came from the doom-and-gloom Capital Economics. They have been predicting for two years now a 25% decline in housing prices. That wasn’t speaking to the GTA or condos specifically, but more to the broad Canadian housing market. As a reader and someone in the industry, I take this report with a grain of salt. My guess is they are trying to grab headlines, as they did last year, with these horror-filled predictions. They point the finger at the Finance Minister’s changes and a growing reluctance for buyers to pay today’s top dollars in light of the global economic uncertainty we are in. While there may be some truth to these reasons, in the short term, it would be near impossible for prices to drop 25% with rates so low. As rates increase, which may not be till 2014 now, then it would be expected to see some pull back in the market.
In terms of the impact that the government changes are having on the market, it’s still too early to tell. I can say that in my office, very few clients were impacted by the change. Pundits may point to the lower numbers being generated this month, but this is also seasonally a very slow month for new deals to be written. I think we’ll need to wait until the fall market to see how much of an impact it really had.
The last bit of news to share is that ING is officially on the chopping block. Our Big Banks seem to be circling as the world’s largest insurer looks to divest itself of some of its holding in light of the bailout package it received. It will be interesting to see who ends up with the $1.7 billion in assets, and how they incorporate the ING clients and business model into their current holdings.
Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!